Bill Carleton (http://www.wac6.com) has done us all a favor by reminding us:
The SEC is planning to propose rules on the accredited investor standard at the beginning of 2011. And the SEC is now seeking, and publishing, input online. See this web form. And see the comments received so far.
Section 413 of the Dodd-Frank Act requires the SEC to:
adjust any net worth standard for an accredited investor…so that the individual net worth of any natural person, or joint net worth with the spouse of that person, at the time of purchase, is more than $1,000,000 (as such amount is adjusted periodically by rule of the Commission), excluding the value of the primary residence of such natural person, except that during the 4-year period that begins on the date of enactment of this Act, any net worth standard shall be $1,000,000, excluding the value of the primary residence of such natural person.
In addition, the Dodd-Frank Act says that the SEC may:
undertake a review of the definition of the term ‘‘accredited investor’’, as such term applies to natural persons, to determine whether the requirements of the definition, excluding the requirement relating to the net worth standard described in subsection (a), should be adjusted or modified for the protection of investors, in the public interest, and in light of the economy.
And, the SEC may:
Upon completion of a review under [described above], the Commission may, by notice and comment rulemaking, make such adjustments to the definition of the term ‘‘accredited investor’’, excluding adjusting or modifying the requirement relating to the net worth standard described in subsection (a), as such term applies to natural persons, as the Commission may deem appropriate for the protection of investors, in the public interest, and in light of the economy.
These provisions are found in Section 413 of the Act.
The startup community needs to start commenting that it is in the best interests of the economy, and for job creation, that the accredited investor standard be substantially lowered, not raised. Job creation in this country disproportionately comes from young companies, and we need these young companies to be able to raise money. It would be very bad for the startup community for the SEC to significantly raise the accredited investor thresholds.